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BW Businessworld

Tech Mahindra: The Big Fish

Tech Mahindra is a $3.9-billion IT company with 1,05,200 plus professionals across 90 countries, serving over 788 global customers including Fortune 500 companies

Photo Credit : Bivash Banerjee

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Tech Mahindra is a $3.9-billion IT company with 1,05,200 plus professionals across 90 countries, serving over 788 global customers including Fortune 500 companies. It is a part of the $16.9-billion Mahindra Group that employs more than 2,00,000 people in over 100 countries. In 2013, Tech Mahindra announced the completion of the landmark merger with Mahindra Satyam — four years after Mahindra Group acquired software-services firm Satyam Computers, then hit by an accounting scandal by its promoter Ramalinga Raju.

Since then, the company has almost been on a meteoric rise with an average four-year sales growth of 52.3 per cent and an average four-year PAT growth of 75.8 per cent. In a way, Satyam’s fall has proven to be a boon for Tech Mahindra, which until then was not an industry frontrunner.

The tech major has been featured in BW Businessworld’s Heavyweight category. In the fiscal year 2014-15, the company’s consolidated revenues rose 20.1 per cent to Rs 22,621 crore from Rs 18,831 crore in the previous year. The growth during the year was led by acquisitions as well as organic growth. The consolidated PAT amounted to Rs 2,627.7 crore as against Rs 3,028.8 crore last year. The number of customers increased from 629 in the previous year to 767 at the end of fiscal 2014-15.

In keeping with the pace of change and filling gaps in its portfolio, the company’s growth has largely come from a string of strategic acquisitions to consistently strengthen its competencies.

The acquisition of Lightbridge Communications Corporation gives Tech Mahindra an opportunity to offer full range of network services and integrated infrastructure solutions to both communication service providers as well as to the ecosystem of partners catering to the communication sector.

The acquisition of Sofgen, a niche consulting and services company, gives the IT giant an opportunity to enhance expertise and to implement modernised core banking and transformation services capabilities. It also acquired a majority stake (of 75 per cent) in FixStream Networks Inc, a technology startup.

In its latest, Tech Mahindra announced acquisition of a majority stake in Italian automotive design and engineering services firm Pininfarina. The transaction is said to enhance the engineering design and services footprint (currently contributing 7 per cent to revenues) of Tech Mahindra. “The acquisition is marginally EPS dilutive in the short term, however, Tech Mahindra will benefit from revenue synergy, client acquisition and the resultant cross selling,” brokerage firm Prabhudas Lilladher said.

[email protected]; @ayushmanb